Definition
Bullish Harami consists of a long black candle and a short white candle. Harami means pregnant in Japanese. The long candle is the mother, the short candle represents the child.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: Low
- Type: Bullish
- Number: 2
Recognition
- The market is in a downward trend.
- The first day is a long black candle.
- The second day is white candle. Its whole body is covered by the black candle. The shadows are not necessarily covered, but the more is covered, the more reliable the formation.
Interpretation
Bullish Harami reflects uncertainty on the market. The first day is a long black candle. On the second day, the market opens higher than the previous day’s closing. At this point, investors start closing their short positions and open long positions. Harami pattern is the first two candles of the Tree Inside Up pattern. A Harami is not enough to decide to open a new position.
Important factors
The speciality of the formation is the short candle which is totally covered by the black candle. The appearance of a Bullish Harami does not immediately signal a trend reversal. The market usually moves sideways after the Bullish Harami. A confirmation about the reversal is needed on the third day. The confirmation could come from a white candle with an upward gap or a higher closing price.
